When Tesla (NASDAQ:TSLA) perma-bull Dan Ives of Wedbush cuts his price target on TSLA stock, you know the company’s situation has gone from bad to worse.

In a recent CNBC interview, Ives suggested Tesla may be going through a “code red” moment, with demand-related issues picking up for the sector overall. As the leading EV maker in the U.S. and with slower demand out of China, Ives is among the analysts who are lowering expectations for the coming quarters. This comes after Tesla reported what many are calling dismal first-quarter production and delivery numbers.

I’ve taken a bearish stance on Tesla’s valuation relative to other automakers for some time. However, seeing bullish analysts lower their price targets (Dan Ives cut his price target to $300 from $315) certainly increases the likelihood that bearish sentiment will continue to take hold of this stock, at least over the near term.

Let’s dive into what this particular analyst note said and why investors appear to be taking the under on TSLA stock right now.

TSLA Stock Sinks on Key Price Target Cut

Now, it should be noted that Ives’ price target cut is small, and at a $300 target, implies the stock can still nearly double from current levels. So, it’s fair to say he’s still very bullish on the EV maker right now.

That said, his commentary around production estimates for Q1 is notably lower than where he saw these numbers in the past. Ives now predicts Tesla will report deliveries of between 425,000 and 475,000 vehicles in the first quarter. That would be a “nightmare” scenario for the company, in his words, but it also appears to reflect broader sentiment on Wall Street about where these numbers will come in at.

Fellow analyst Adam Jonas with Morgan Stanley has also reduced his delivery forecast numbers to just above 425,000 units. If he’s right, Tesla’s delivery numbers are more likely to come in closer to the bottom end of Dan Ives’ range. Such numbers could lead to further price cuts down the line, particularly as Tesla China numbers come in very weak.

I think this year is shaping up to be a very difficult one for Tesla and its investors. Competition is heating up at the same time that demand is drying up, leading to price cuts and an unfavorable environment for investors. This is a stock I’d steer clear of until the narrative changes.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.